JanetM

I used peak years ago when I worked as CPA. They changed the the name to hyperprep and is now called Relius. Was glad to see that my current employer (private industry) uses Relius for 5500 for prep. Look at www.sungardcorbel.com for more info.

Can you request a lump sum payoff amount and send the funds back to the plan? May cost you bit in interest - but if you don't pay off the loan will default.

A small-town prosecutor called his first witness to the stand: a grandmotherly, elderly woman. He approached her and asked, "Mrs. Jones, do you know me?" She responded, "Why yes, I do know you, Mr. Williams. I've known you since you were a young boy. And frankly, you've been a big disappointment to me. You lie, you cheat on your wife, you manipulate people and talk about them behind their backs. You think you're a rising big shot when you haven't the brains to realize you will never amount to anything more than a two-bit paper pusher. Yes, I know you." The lawyer was stunned. Not knowing what else to do, he pointed across the room and asked, "Mrs. Williams, do you know the defense attorney?" She replied, "Why, yes I do. I've known Mr. Bradley since he was a youngster, too. I used to babysit him for his parents. And he, too, has been a real disappointment to me. He's lazy, racist, and he has a drinking problem. The man can't build a normal relationship with anyone, and his law practice is one of the shoddiest in the entire state. Yes, I know him." At this point, the judge rapped the courtroom to silence and called both counselors to the bench. In a very quiet voice, he threatened, "If either of you asks her if she knows me, you'll be jailed for contempt!"

Since this person is not eligible for distribution - this is only for you to ponder. Could the investment company be calling cash as opposed to "in-kind"? Maybe the plans don't have the same investment options - you can't rollover assets as they are from one plan to the other. Like I said - this is moot since person in not eligible for distribution.

All we require is copy of EOB that shows amounts not paid by insurance. You can't take a hardship for future medical bills - only those already incurred. What PHI would be on EOB? You don't need to have doctors note or hospital charts.

As this is control group issue, why not just transfer his balance from non-union plan to union plan. They way he can pay on the loan. Do your plan documents permit tranfer between plans?

If your 5 employers are a controlled group you file as one entity and count all participants. Just to clarify - you have 5 employers who form a control group? So you have common ownership and just one entity sponosrs the plan?

this is posted on benefitslink today - last paragraph states the following. "Many companies enjoyed large pension surpluses during the stock market boom and now have deficits, and some sponsors must now make big contributions to comply with the law. There are fears that if the pension agency raises its premiums for all companies, those with healthier funds will drop out of the system. That would make the agency's finances even worse." Am curious about how plan sponsor can drop out of PBGC program. Is the author of the article mistaken or is there something to this?

They don't necessarily have to be merged into one plan if you can pass all the coverage and discrimination tests.

There are a few hoops to jump thru - first ......... The special construction rule applies if (1) the plan primarily covers employees in the building and construction industry, and (2) substantially all of the employees with respect to whom an employer has an obligation to contribute under the plan, perform work in the building and construction industry (ERISA section 4203(b)(1)). Second............. Under the definition in section 4203(b)(2) of ERISA, a complete withdrawal occurs only if a construction industry employer ceases to have an obligation to contribute under the plan, and the employer either continues to perform previously covered work in the area of the collective bargaining agreement or resumes such work within five years without renewing the obligation to contribute at the time of resumption. This was enacted because congress and PBGC agreed that these employers not contributing to the plan would not necessarily weaken the plan. In the last few years I have seen only one MEP that did not have poor financial results. Plan could argue that the cessation of contributions will add to the funding problems. Keep in mind - the fund can levy a liability and you will have to pay first then litigate later.

Look at section 4203 and 4211. You don't get to walk away free and clear you just calculate the liability in a different manner. Best advise - consult atty who know MEP law.

Amen to that!

The Plan sponsor has fiduciary duty to prudently invest the assets. When the funds were transferred you ceased to have participant direction (if you even had it before the transfer) and 404© protection. I would say this is not a prudent investment.

GBurns, From a fianancial planning standpoint, at least IMHO as reformed CPA, when someone goes from being a renter to a buyer - they are much better off. A person may be well able to make a $600 house payment, but only if the down payment is made. If they have to borrow to make down payment the addition $200 per month makes the purchase of home impossible. This does not make them marginally solvent. If the hardship distribution safe harbors - written by IRS - include down payment for primary residence. This may eliminate future hardship situation by resulting in lower monthly payment. We allow hardships from all our K plans for down payment of residence. We require copy of contract and good-faith estimate in order to process distribution. We will gross up for taxes if asked. As for 401(k) loan - the lenders don't see it on credit report but they do see it on paystubb. Things like child support, garnishments, and other deductions taken from pay never show up on credit report. They will see pay stub - the gross and all deductions. That, in addition to credit report and borrowers listing, are what lender bases ability to pay upon. I don't live in fantasy land GBurns, I have 12,000 employees who work low tech manufacturing for single digit per hour rates. Many do not speak english as primary language. Hardships for home purchase are actually common in my group, as is the occurence of those who are better off deferring income on an after tax basis.

For many individuals this is the best way to save. We are manufacturing entity - many of our employees make $7 to $9 dollars. Of this group we have head of household filers who receive earned income credit. This group pays low or no taxes to begin with and don't benefit from tax deferred savings. We allow withdrawal of After tax amounts at any time - subject to minimum of $500. This in effect makes for short term savings account for many folks. While this is not what the plan was designed for - at least they are saving and it is hoped with more education they will look at plan as long term vehicle for savings rather than short term.

At the risk of getting into a long and heated discussion I will address your points. You said: First, if as you say, they are taking only minimum loans, doesn't that mean that they still have loan amounts available thereby disqualifying them from hardship withdrawals? In other words minimum loan means that they are not eligible for hardship w/d. I say - No. Taking the minumum does not mean you still have funds available. Example - our Plan says you can only take one loan in 12 month period. Participant borrows funds in January, decides to buy house in August. Since no loan is allowed at his time - regardless of amount borrowed and amount available - how could you deny hardship? You said: Second, I meant that the participant should prefer plan loan over hardship withdrawal. I say: What if the loan creates financial hardship - in this case person is buying house - so in addition to monthly mortgage they have loan payment. You said: Third, Have they really worked out the tax effect to their tax return? I bet that most of these $25K earners will (with the mortgage interest) now have more deductions etc than they can use (deduct) and so the tax and penalty of the hardship w/d will be a greater burden. I say: Not necessarily - as you point out - with the mortgage deduction their tax rate will be low - meaning the tax on hardship will be low. As a one time event, grossed up for taxes, this hardship can allow lower income individuals to purchase a home - and still afford to make the payments. You said: Fourth, Why does the plan loan have any effect on mortgage qualification? As I pointed out before, they most likely need to get a different mortgage source, this one seems very questionable. I say: Most lenders - regardless of what type of institution - require a certain amount of disposable income. If participant takes loan from plan that debt, seen the same as credit card or auto payment. Reduces the amount the participant can pay for mortgage. If the total payments mandated to be paid each month is over a certain percentage of participants income - no institution will make the mortgage loan. (this of course ignores the exsistance of subprime vultures) You said: Last, To whom is the 401(k) plan loan payable???????? I say: I don't understand your question - the loan is payable back to participants account. As you are so quick to tell posters they haven't thought through their responses maybe I make a "GBurns comment" and say you should stick to cafeteria plans. But I won't because I am one who believes if you have nothing nice to say, shut your mouth.

Am confused by your answer. But I think you mean why would participant prefer mortgage over plan loan. Most of our employees are your 25K a year earners. The hardship is for down payment. Yes the cost of taking a hardship is tax and penalty - but if they incur large plan loan they may not qualify for mortgage. By taking the minimum loan - they are eligible for hardship as no additional loans can be made. Mortgage loan interest is tax deductible to participant - plan loan interest is not. I know a plan can make a "mortgage" type loan - but our does not. In all my years in this business - even as TPA for CPA firm - I never once saw plan allow a loan for more than five years.

Many of my participants take the hardship after taking the minimum loan amount. This is usually because the institute financing the mortgage frowns on large 401(k) loans.

planeterisa.com

Well at 12/31/00 they were 52% funded - per the schedule B. The UVB pool increased $750 million in 2001. Is really bad.

Have read Milliman's article on mulitemployer plans funding problems and am wondering what the rights of a participating employer are? We have a number of companies in the SMW pension plan and it is underfunded. What right do we have to information since we are the ones who will pay the excise tax?

What does the plan say about the beneficiaries? Start there and see if they have violated terms of plan.

Another thing to ensure a single person acting alone can not do this is what we accountants call seperation of duties. Am guessing you think someone in your shop may try to take a distribution of their own from someone elses plan. Have a check list - Have one person calculate the amount to be distributed and sign off. have second person verify the documentation (signatures, real employee, termination occured) and sign off have third person send instructions to custodian and sign off. If you have small shop - have at least two people involved with the transaction.

Start with the plan document. It will list the kinds of hours included and those excluded. Adding WC hours is not mandatory for a Plan.

I would say 1/1/04. Service requirement is met as of 12/31/03 since you say service is credited at end of period. Next entry date is 1/1/04.